How to Buy Cover

Benefits of Being Covered

Every year, the number of exploits or hacks in DeFi grows in number and value. According to Immunefi, crypto assets totalling $2,660,229,845 were lost through hacks, located vulnerabilities, and errors in protocols in 2021. In Q1 2022, more than $1.22m in crypto assets were lost due to smart contract and technical failure.
Source: Immunefi Crypto Losses Reports 2021 and Q1 2022
Buying cover for your productive assets is the best way to hedge against smart contract risk and protect your funds when you are participating in the DeFi ecosystem.

Selecting the Right Cover Product

Nexus Mutual offers three main cover products:
  • Yield Token Cover | Full-stack protection for productive assets exposed to multiple underlying protocols and various smart contract risk. Yield Token Cover offerings include select Yearn v2 vaults, Idle Finance pools, and Curve Finance pools.
  • Protocol Cover | Comprehensive, cross-chain coverage packaged in just one policy. Protects assets within a protocol's smart contract system.
  • Custody Cover | Protection for assets kept on a centralised exchange. When your funds are held by a custodian, they are exposed to a variety of risks. With Custody Cover, you are protected against a custodian-wide loss or in the event withdrawals are unavailable for more than 90 days.
For more information, you can review the detailed entries in the Types of Cover section of the documentation.

What Factors to Think About When Buying Cover

Once you know what cover product you want, you should consider the following factors:
  • How long do you need to be covered? The minimum duration of a cover policy is 30 days and the maximum duration is 365 days.
  • What payout denomination works best for you? When you buy your cover policy, you have to select the currency you want to receive a payout in should a loss event occur. You can select ETH or DAI. Most users select ETH as they payout denomination for more volatile assets and DAI as the payout denomination for more stable assets.
  • Which currency do you want to pay for your policy with? You can pay with ETH, DAI or NXM when you buy your cover policy. Consider which one you want to use for payment.

How to Buy Cover

Now that you are ready to buy cover, you can head to https://app.nexusmutual.io/home.
On the Home page, you will see the Welcome menu below, which displays your current holdings, covers, claims, and membership status.
The view on the Nexus Mutual Home page
From here, you will select the Buy Cover tab on the main menu. Once you have clicked on that tab, you will see the Buy Cover page, which is presented below:
The view on the Buy Cover page of the Nexus Mutual application
On this page, you can see the different brief explanations of the mutual's cover products. Below these explanations are the various listed protocols, custodians, and yield token cover products.
You can filter by cover product: Yield Tokens, Protocols, and Custodians. You can also enter in the name of the platform or product you want to buy cover for.
In this tutorial, you will follow the process for buying cover by walking through a Protocol Cover policy purchase for Notional Finance v2.
To find the Notional Finance v2 listing, you can enter the name of the protocol in the Search bar:
After searching for "Notional," we can see two available options
For this search, you see two possible results: Protocol Cover for Notional Finance v2 or Notional Finance. Because you are protecting a deposit in Notional Finance v2, you will select Get Quote for that listing.
After you click Get Quote, you will see the Quote Details page which looks like the image pictured above
On the Quote Details screen, you will be presented with several fields, which are pictured in the image above and described below:
  1. 1.
    Amount: This field is where you select your payout denomination (ETH or DAI) and the amount of capital that you want to cover. While payout denomination is only in ETH or DAI, you can cover any asset that is deposited within a listed protocol, custodian or yield token cover product.
  2. 2.
    Period: This field is where you select the duration of your cover policy. The minimum duration is 30 days and the maximum duration is 365 days. Enter the number of days you want your cover policy to protect your assets for.
  3. 3.
    Terms and Conditions: This is a brief review of the terms for Protocol Cover, the support chains for the selected protocol, and the conditions for submitting a claim in the event of a loss of funds. Be sure to read this before proceeding to item #4. The link included at the bottom of the Terms and Conditions is the link to the Protocol Cover wording.
  4. 4.
    "I have read and accept the terms and conditions" field: Before you can proceed with your cover purchase, you need to select this after you have read the Terms and Conditions.
  5. 5.
    Grant TokenController Permission: If you look at the highlighted item under the Pay In field above, you will see the option to pay in either DAI or NXM. Here, you have selected NXM, so the protocol needs you to grant permission over your NXM to continue with payment. You can approve the NXM necessary for payment OR you can approve an unlimited amount of NXM for this and future payments.
  6. 6.
    Buy Cover: After you have submitted the Grant TokenController Permission approval transaction, you will be able to purchase cover. When your approval transaction is complete, you will see this button appeal as bright green instead of the dull green pictured above.
Since you have read through the Terms and Conditions, clicked that you have read and agree to the terms, and have chosen to approve 0.13 NXM to pay for the cover policy, you will be prompted to approve the transaction through your wallet provider. In this case, you are using MetaMask and you see the following:
The approval transaction prompt to grant the TokenController contract permission to spend 0.13 NXM
To submit the transaction, select Confirm.
After you have submitted the approval transaction, you can see the pending transaction in the menu on the top bar of the application:
Set allowance for TokenController transaction is shown as pending in this drop down menu
Once the approval transaction is complete, you will be able to click Buy Cover and move through the prompt for the second transaction, which will execute the purchase of your cover policy. To buy your cover, you must see the following fields pictured below:
Agreed to terms and conditions; granted TokenController permission to spend NXM; ready to buy cover
After clicking Buy Cover, you will be asked to approve a transaction. After you submit the transaction, you can see your pending transaction in the drop down menu on the top bar of the application:
Buy Cover transaction is shown as pending in this drop down menu
Once the transaction is approved, you will have successfully purchased a cover policy from Nexus Mutual! In this case, you purchased a Protocol Cover policy for Notional Finance v2.
To review your newly purchased cover policy, you can go back to the Home tab where you started and look at the Welcome menu under My Covers.
You can confirm a cover purchase has been successful by checking the My Covers section on this page. Here, you will see a full list of your current cover policies along with the Cover ID, Project Name, Cover Amount, Premium Paid, and the ability to file a Claim.
Now you are ready to buy your own cover policy for the protocol, custodian, or yield token cover product of your choice!
If you want to understand how filing a claim works, you can review the How to File a Claim tutorial.
If you want to review the different cover products Nexus Mutual offers, you can read the Types of Cover section.
If you need any support purchasing cover get in touch with our team via our Discord server, on Twitter or on Telegram.